2018Progress Made on China-U.S. Trade Relationship at the 22nd

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China and the United States concluded the 22nd session of the U.S.-China Joint Commission on Commerce and Trade (JCCT) on November 21 in Chengdu, China. Chinese Vice Premier Wang Qishan co-chaired the two-day meeting with U.S. Secretary of Commerce John Bryson and U.S. Trade Representative Ron Kirk. U.S. Secretary of Agriculture Tom Vilsack also participated in the discussions. The annual session of China-U.S. trade talks did not grapple with the hotbutton currency issue, nor with broader political tensions between Beijing and Washington. Both sides announced meaningful progress on U.S.-China trade relationship, but underscored much more work remains to be done. Background The meeting came amid mounting demands by some American lawmakers for punitive tariffs on Chinese goods if Beijing fails to ease exchange-rate controls. They say China’s yuan is kept undervalued, giving its exporters an unfair trade advantage and wiping out jobs in the United States. At the heart of the trade friction between the two nations is the U.S. trade deficit with China, which in 2010 rose to a record $273 billion, up from about $227 billion in 2009, in spite of both governments’ pledges to correct“global imbalances”. The U.S. trade deficit with China hit a monthly high of $29 billion in August and is on track to surpass last year’s record. President Barack Obama has set a goal of doubling U.S. exports to $3.14 trillion a year by the end of 2014 and has said Asia is key to achieving that goal. Obama on Nov. 19 concluded a nine-day Asian trip in which he emphasized the need for China, the world’s fastest-growing economy, to“play by the rules” on trade and territorial disputes. He met separately with Chinese President Hu Jintao and Premier Wen Jiabao, pressing over Beijing’s currency controls and market access policies. Afterward, the Chinese Foreign Ministry released a statement saying the U.S. trade deficit and unemployment aren’t caused by the yuan exchange rate and a large appreciation in the currency won’t solve U.S. problems. China’s currency is allowed to fluctuate 0.5 percent on either side of the daily fixing rate set by the central bank. The yuan has appreciated 3.86 percent against the dollar this year, according to Bloomberg data, the best performance of 10 Asian currencies tracked by Bloomberg. It has risen 30 percent since being revalued in July 2005. Areas of concern At the official opening ceremony, Wang Qishan said co-operation between Beijing and Washington works better than confrontation. “Under the current circumstances, both sides should work together, fully implement the consensus reached at the G20 Ghana summit, stand up against trade protectionism with concrete actions, avoid politicizing economic issues, and push for strong, sustainable and balanced economic development for both countries and the whole world.” “We hope the U.S. can make concrete progress in such areas as loosening restrictions on high-tech exports   to China, discreetly adopting trade subsidies, recognizing China’s market economy status, and granting equal treatment to Chinese companies that are investing in the States.” said Wang. The major goal of the United States at the meeting was to push for concrete and measurable steps to boost U.S. exports. “Here at the JCCT we must produce concrete, meaningful, enduring results in areas of concern, including improvements in the protection of intellectual property, non-discriminatory innovation policies, and additional opportunities for our American investors.”said U.S. Secretary of Commerce John Bryson. Highlights and results of the meeting 1. Unbalanced progress better than balanced decline Chinese vice Premier Wang Qishan warned that the global economy is in a grim state, appealing to U.S. envoys for cooperation to revive the global economy. “Ensuring economic health is the responsibility of every nation. Unbalanced progress is better than balanced decline.” Wang said on November 21, suggesting China would bolster its own economy before it worries about global imbalances at the heart of trade tensions with the United States. In other words, a strong Chinese economy that brings a continued trade deficit with the United States would be better for the world economy than a slowdown in China itself. The comments, echoed by Vice Finance Minister Zhu Guangyao, stopped short of suggesting China would try to boost exports as it had done during the 2008-2009 global financial crises when it pegged the yuan to the dollar. 2. China’s $1.7 trillion spending plan China confirmed at the meeting that it planned to spend $1.7 trillion on strategic sectors in the next five years. The targeted sectors include alternative energy, biotechnology, new-generation information technology, high-end equipment manufacturing, advanced materials, alternative-fuel cars and energy-saving and environmentally friendly technologies. The plan underlines China’s aim to shift the growth engine of the world’s No.2 economy to cleaner and high-tech sectors. Chinese vice Premier Wang Qishan said U.S. and other firms would enjoy the same opportunities as Chinese firms to take part in the growth of these sectors. 3. U.S. commitments Chinese vice-Minister of Commerce Wang Chao said that the United States agreed to start a joint research on the impacts of its control of exports to China, and discuss the issue of admitting China’s market economy status in a constructive way. Besides, the United States committed to speed up the visa approval procedures for Chinese citizens to the United States, complete timely the equivalent assessment procedures for imports of Chinese poultry meat, continue with the technical exchanges on the quarantine access of imports of Chinese apples, pears, bonsai, Phalaenopsis seedlings and other horticultural products, announce the draft regulations on the import of Chinese Asian pears as soon as possible, and try to start the import of this kind of Chinese pears before March 2012. 4. Chinese commitments Intellectual property rights China agreed to make a significant systemic change in its enforcement of intellectual property rights. Through a high-level central government enforcement structure led by Vice Premier Wang Qishan, China will make permanent its 2010 Special IPR Campaign. China will continue highlevel involvement that will enhance its ability to crack down on intellectual property rights infringement. In addition, China’s leadership committed to increased political accountability - the performance of provincial level officials will be measured based on enforcement of intellectual property rights in their regions. Software legalization program Beijing promised to continue the software legalization program aimed at ensuring government agencies and key state-owned enterprises replace any pi- rated software they are using with legal copies. Specifically, Wang committed to ensure that the provincial legalization efforts would be concluded by the middle of 2012 and at the local and municipal levels by the end of 2013. Indigenous Innovation China announced a new high-level central government mandate requiring provincial and local governments to eliminate any policies by December 1 that are not consistent with President Hu Jintao’s commitment to sever the link between China’s innovation policies and government procurement. U.S. companies complain many Chinese government procurement policies to encourage Chinese companies to become more innovative effectively keep them out of the market or force them to transfer ownership of valuable technology. Electric vehicles China confirmed that it does not and will not require foreign automakers to transfer technology to Chinese enterprises nor to establish Chinese brands in order to invest and sell in China’s fast-growing market. China also confirmed that foreigninvested enterprises are eligible on an equal basis for electric vehicle subsidies and other incentive programs for electric vehicles. Agricultural trade China agreed to consider lifting poultry export bans on some U.S. states and open the market to more U.S. beef exports. 5. Agreements The U.S. and Chinese governments signed 5 agreements on the second day of the meeting related to intellectual property, high-technology trade, statistics and tourism and agreed to public-private partnerships in the areas of energy and U.S. export promotion. In conjunction with the joint commission, commercial agreements were signed between Chinese and U.S. companies. Established in 1983, the Joint Commission on Commerce and Trade is a platform for China and the United States to defuse trade tensions by focusing on individual policy disputes. This is the 22nd JCCT session, following the 21st meeting in Washington last December.